Forget about the trade spat – coal is passé in much of China, and that’s a bigger problem for Australia



Greg Baker/AP

Hao Tan, University of Newcastle; Elizabeth Thurbon, UNSW; John Mathews, Macquarie University, and Sung-Young Kim, Macquarie University

Australian coal exports to China plummeted last year. While this is due in part to recent trade tensions between Australia and China, our research suggests coal plant closures are a bigger threat to Australia’s export coal in the long term.

China unofficially banned Australian coal in mid-2020. Some 70 ships carrying Australian coal have reportedly been unable to unload in China since October.

This is obviously bad news for Australia’s coal exporters. But even if the ban is lifted, there’s no guarantee China will start buying Australian coal again – at least not in huge volumes.

China is changing. It’s announced a firm date to reach net-zero emissions, and governments in eastern provinces don’t want polluting coal plants taking up prime real estate. It’s time Australia faced reality, and reconsidered its coal export future.

Coal ship unloads at Chinese port
China’s coal import quotas are hurting Australian exporters.
Wang Kai/AP

First, the coal ban

In May last year, China’s government effectively banned the import of Australian coal, by applying stringent import quotas. As of last month coal exports to China from Newcastle, Australia’s busiest coal exporting port, had ceased.

In 2019, Australia exported A$13.7 billion worth of coal to China. This comprised A$9.7 billion in metallurgical coal for steel making and A$4 billion in thermal coal for electricity generation.

The latest official Australian data shows these export levels fell dramatically between November 2019 and November 2020. Comparing the two months, metallurgical and thermal coal exports to China were down 85% and 83% respectively.




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Several Chinese provinces experienced power blackouts in late 2020. China’s state-backed media said the shortages were unrelated to the ban on Australian coal. Instead, they blamed cold weather and the recovery in industrial activity after the pandemic.

We dispute this claim. While Australian coal accounts for only about 2% of coal consumption in China, it helps maintain reliable supply for many power stations in China’s southeast coastal provinces.

Coal mining in China mostly occurs in the western provinces. Southeast coastal provinces are largely economically advanced and no longer produce coal. Instead, power stations in those provinces import coal from overseas.

This coal is cheaper than domestic coal, and often easier to access; transport bottlenecks in China often hinder the movement of domestic coal.

Coal mine at Gunnedah in NSW
Australian thermal coal helps supplement China’s domestic supply.
Rob Griffith/AP

Beyond the trade tensions

Experience suggests trade tensions between Australia and China will eventually ease. But in the long run, there is a more fundamental threat to Australian coal exports to China.

Data from monitoring group Global Coal Tracker shows between 2015 and 2019, China closed 291 coal-fired power generation units in power plants of 30 megawatts (MW) or larger, totalling 37 gigawatts (GW) of capacity. For context, Australia decommissioned 5.5 GW of coal-fired power generation units between 2010 and 2017, and currently has 21 GW of coal-fired power stations.

The closures were driven by factors such as climate change and air pollution concern, excess coal power capacity, and China’s move away from some energy-intensive industries.

Our recently published paper revealed other distinctive features of the coal power station closures.




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The Paris Agreement 5 years on: big coal exporters like Australia face a reckoning


First, China’s regions are reducing coal power capacity at different rates and scales. In the nation’s eastern provinces, the closures are substantial. But elsewhere, and particularly in the western provinces, new coal plants are being built.

In fact, China’s coal power capacity increased by about 18% between 2015 and 2019. It currently has more than 1,000 GW of coal generation capacity – the largest in the world.

Second, we found retired coal power stations in China had much shorter lives than the international average. Guangdong, an economically developed region of comparable economic size to Canada, illustrates the point. According to our calculation, the stations in that region had a median age of 15 years at closure. In contrast, coal plants that closed in Australia between 2010 and 2017 had a median age of 43 years.

coal plant in China
Coal plant closures have been most marked in China’s east.
AP

This suggests coal power stations in China are usually retired not because they’ve reached the end of their productive lives, but rather to achieve a particular purpose.

Third, our study showed decisions to decommission coal power stations in China were largely driven by government, especially local governments. This is in contrast to Australia, where the decision to close a plant is usually made by the company that owns it. And this decomissioning in China is usually driven by a development logic.

Coal plant closures there have been faster and bigger than elsewhere in the country, as governments replace energy- and pollution-intensive industries with advanced manufacturing and services.

And as these regions become richer, the value of land occupied by coal power plants and transmission facilities grows. This gives governments a strong incentive to close the plants and redevelop the sites.

In coming years, southeast China will increasingly shift to renewable-based electricity and electric power transmitted from western provinces.

Man covers mouth
Air pollution concerns are helping drive China’s move away from coal-burning for power.
Ng Han Guan/AP

Securing our energy future

Coal power stations in China’s eastern coastal regions will continue to close in coming years, and power generation capacity will be redistributed to western provinces. For reasons outlined above, that means power generation in China will increasingly rely on domestic coal rather than that from Australia.

China’s coal exit is in part due to its strategy to peak its carbon emissions before 2030 and achieve net-zero by 2060. Australia must realistically appraise its coal export prospects in light of the long-term threat posed by shifts in China and other East Asian nations.

The Morrison government, and industry, should re-double efforts to rapidly expand renewable energy in Australia. Then we can leave coal behind, and emerge as a renewable energy superpower.




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The Conversation


Hao Tan, Associate professor, University of Newcastle; Elizabeth Thurbon, Scientia Associate Professor in International Relations / International Political Economy, UNSW; John Mathews, Professor Emeritus, Macquarie Business School, Macquarie University, and Sung-Young Kim, Senior Lecturer in International Relations, Discipline of Politics & International Relations, Macquarie School of Social Sciences, Macquarie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Paris Agreement 5 years on: big coal exporters like Australia face a reckoning



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Jeremy Moss, UNSW

On Saturday, more than 70 global leaders came together at the UN’s Climate Ambition Summit, marking the fifth anniversary of the Paris Agreement.

Prime Minister Scott Morrison was denied a speaking slot, in recognition of Australia’s failure to set meaningful climate commitments. Meanwhile, the European Union and the UK committed to reduce domestic emissions by 55% and 68% respectively by 2030.

As welcome as these new commitments are, the Paris Agreement desperately needs to be updated. Since it was passed, the production and supply of fossil fuels for export has continued unabated. And the big exporters — such as Norway, Canada, the US, Russia, Saudi Arabia and of course Australia — take no responsibility for the emissions created when those fossil fuels are burned overseas.

It’s time this changed. Australia is the world’s biggest coal exporter. And in 2019, emissions from fossil fuels exported by this nation, as well as the US, Norway and Canada, accounted for more than 10% of total world emissions, according to calculations from a research project on Australia’s carbon budget at the University of NSW, which I run. Exporting nations are not legally responsible for these offshore emissions, but their actions are clearly at odds with the climate emergency.

Business as usual

A 2019 UN report notes governments are planning to extract 50% more fossil fuels than is consistent with meeting a 2℃ target and an alarming 120% more than a 1.5℃ target, by 2030. Coal is the main contributor to this supply overshoot.

UN Secretary-General António Guterres urged all leaders to declare a climate emergency.

But rather than reducing their production of fossil fuels, many countries are doubling down and actually increasing supply. For example, in Australia, government figures show the greenhouse gas emissions from Australia’s exported fossil fuels increased by 4.4% between 2018 to 2019.

Australia is the world’s largest coal exporter and approved three new fossil fuel projects in recent months: the Vickery coal mine extension, Olive Downs and the Narrabri Gas Project

This is a worldwide trend. Let’s take Norway as another example. Norway gets the bulk of its electricity from hydropower and has partially divested its Government Pension Fund from some fossil fuels. Yet it’s also one of the largest exporters of greenhouse gases through its gas exports, behind Qatar and Russia.




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The situation is mirrored in the corporate world. Many large fossil fuel companies are trumpeting their emissions reductions targets while continuing to push for new fossil fuel mining projects. BHP, one of the world’s biggest miners, stated it is reducing its emissions, yet in October the company increased its stake in an oil field in the Gulf of Mexico.

Responsibility doesn’t stop at the border

What underpins this situation is an outdated “territorial” model of responsibility for climate harms. Governments and companies seem to think responsibility stops at the border, not with the overall livability of the global climate. Once the coal, oil and gas products are loaded onto ships, they are no longer our problem.

Unfortunately, the accounting rules of the United Nations, under the Paris Agreement, currently allow exporters to pass on responsibility for fossil fuel emissions.

We must move from this territorial model of responsibility to one that considers the whole chain of responsibility for climate harms.

So what should Australia, Canada, the US, Norway and other exporting countries do to address the over-supply of fossil fuels?

First, they need to acknowledge their responsibility, at least in part, for the emissions and associated harms caused by their exports. Allowing compensation and funding for mitigation to track the role played in the causal chain better attributes responsibility and places mitigation burdens back on the exporting countries.




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Future climate negotiations, such as in Glasgow in 2021 (COP26), need to adjust the scope of their targets to include robust reductions in the supply of fossil fuels in the next round of agreements.

Instead of just focusing on reducing demand, the process needs to function as a kind of “reverse OPEC” (the Organisation of the Petroleum Exporting Countries), where exporting countries are given ambitious phase-out targets for their fossil fuel exports.

Drastic emissions cuts needed

The 2020 Production Gap report notes global fossil fuel production will have to decrease by 6% a year between 2020-30 to meet a 1.5℃ target.

For Australia, this must mean we include the reduction in “exported emissions” as part of any net-zero target. Australia’s exported emissions are double our domestic emissions – a situation that cannot continue.

Top of the list of what’s needed, is the phasing out of generous subsidies for fossil fuel producers. The billions of dollars currently spent annually in Australia on subsidising and encouraging fossil fuel exports are simply not compatible with the aims and spirit of the Paris Agreement.




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Phasing out the supply of fossil fuels also needs to occur in a way that doesn’t just pay the current big suppliers to stop. Governments implementing a transition ought to think very carefully about how to fairly deploy scarce resources to ensure a just transition.

Last but not least, governments need to accept that the strong influence fossil fuel corporations wield over the political process is hindering global efforts to address climate change. The donations , rotation of industry staff to government positions and influence of fossil fuel lobby groups cannot lead to good decisions for the climate.

Placing a ban on such influence, particularly at future climate negotiations, would go a long way towards addressing the undue influence of the fossil fuel industry.

Until the fossil fuel export industry is subject to demanding targets, and made to accept responsibility for the emissions associated with their products, Earth will continue on its highly dangerous global warming trajectory.The Conversation

Jeremy Moss, Professor of Political Philosophy, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Japan is closing its old, dirty power plants – and that’s bad news for Australia’s coal exports



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Llewelyn Hughes, Crawford School of Public Policy, Australian National University

Last month, the Japanese government announced a plan to retire its fleet of old, inefficient coal-fired generation by 2030. And what happens to coal power in Japan matters a lot to Australia.

Australia shipped more than A$9 billion dollars’ worth of thermal coal to Japan in 2019 – about 12% of our total thermal coal exports.

In the short term, several new coal plants are being built in Japan to replace scrapped capacity. But there are signs investors are not flocking to invest in expensive new Japanese coal technology.

And in the long run, the investment environment for new coal technology is worsening. If Japan’s commitment to coal weakens, that will mean less demand for Australia’s exports.

Coal on a ship at the Japanese port of Nakhodka.
Coal on a ship at the Japanese port of Nakhodka. Japan is phasing out its old coal infrastructure.
Shutterstock

Japan’s changing coal fleet

Almost all Japan’s nuclear power stations remain shuttered ten years after the Fukushima disaster. The Japanese government has positioned coal as a long-term hedge against the possibility the nuclear power restarts will not proceed as hoped.

However, Japan has also been criticised for its lack of ambition on plans to address climate change under the Paris Agreement.

Last month, the government signalled it will decommission about 100 inefficient coal-fired power units. It aims to reduce coal’s share of the power mix to 26% by 2030 – down from 32% in the 2018 financial year.




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The big questions are: what are the prospects for Japan’s coal fleet, and what does this mean for Australia?

The Japanese government is supporting investment in newer plants, including some that use a high-pressure “gasifier” to turn coal into gas. But these types of plants are expensive to build. With a typical coal plant expected to operate for about 40 years, companies are wary of making huge outlays with relatively limited time to recoup the investment.

Reflecting this, last year Osaka Gas withdrew plans to build a 1.2 gigawatt (GW) coal plant in Yamaguchi Prefecture. Tokyo Gas, Kyushu Electric and Idemitsu also abandoned plans to build a 2GW coal plant in Chiba Prefecture near Tokyo. In total, 30% of planned investment in coal power has been scrapped since 2016.

Then prime minister Malcolm Turnbull shakes hands with a Japanese dignitary at Loy Yang A power station in Victoria.
Then prime minister Malcolm Turnbull shakes hands with a Japanese dignitary at Loy Yang A power station in Victoria. Japan’s phase-out of old coal plants raises questions over its demand for Australian coal in the long term.
Julian Smith/AAP

Renewables are also becoming increasingly important. Japan has big plans for offshore wind power, and renewable electricity is falling in price.

In Europe and elsewhere, such changing economics have helped drive falls in the number of hours that coal plants operate. Globally, final investment decisions for new coal plants fell from more than 100GW in 2010 to just over 20GW in 2018. Although it might take a little longer in Japan, there is no reason to expect things to be different there.

Crucially, these dynamics are underpinned by shifts in Japan’s electricity market to encourage more competition. Over time, that should mean companies find it increasingly difficult to pass the costs of expensive investments in coal technologies to final customers.




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Machinery working in a coal pile
Australia shipped more than A$9 billion dollars of thermal coal to Japan in 2019.
Dave Hunt/AAP

Dim prospects for coal

Mining company Glencore this month announced a plan to cut production from Australian coal mines, citing weak demand due to COVID-19.

The world will recover from the pandemic. But in the longer term, coal in Japan faces even stiffer headwinds – not least market competition and increasing renewables from offshore wind and other technologies.

This creates real questions about the appetite of Japanese companies to wage the increasingly risky bet that coal-fired power represents. Changes in Japan’s power market show the need for Australia to begin transiting to an economy less reliant on carbon-intensive exports.




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The Conversation


Llewelyn Hughes, Associate Professor of Public Policy, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

If we could design JobKeeper within weeks, we can exit coal by 2030. Here’s how to do it



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John Quiggin, The University of Queensland

As we emerge from the lockdown phase of the pandemic, there are many lessons to learn. One is that when given credible warning of an existential threat, it is better to act early and risk doing too much than to delay acting and face a much bigger and harder to solve problem when the warnings turn out to be correct.

While the pandemic will pass, one way or another, the problem of global heating, and its many consequences, is going to be with us for the rest of our lives, and those of our children and grandchildren.

Already the world has had decades of warnings, and has done little to heed them.

To hold the increase in global temperatures to 2⁰C, the world needs to reduce emissions of carbon dioxide by 25% over the next decades, and cut them to zero by 2050.




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Current commitments are inadequate to achieve this.

In Australia’s case, the unjustified use of “carryover credits” means the government is actually proposing an increase in emissions over the next decade, with even larger increases likely in the future.

Quite simply, there is no way of prevent catastrophic climate change unless we stop burning coal to generate electricity, and do it sooner rather than later.

We need to switch 20-25,000 jobs

As of 2020, coal-fired electricity generation is the only major use of carbon-based fuels for which we have a well-developed and affordable alternatives.

For most other uses of carbon-based fuels, alternatives rely on using electricity, as in the case of electric vehicles and “green” hydrogen.

These alternatives are helpful only if the electricity that powers them is coal-free.




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But in Australia, any move to break with thermal coal runs up against the claim that jobs in coal mining and coal-fired power are essential for workers and for communities.

It is a claim I examine in a new report published by the Australia Institute entitled Getting off coal: Economic and social policies to manage the phase-out of thermal coal in Australia.

It finds that a transition from thermal coal mining could be managed fairly, without significant job losses and while protecting coal-dependent regions.

25,000 is not a big number

Contrary to widespread perceptions, thermal coal mining is not a major employer, and most workers in the industry are not miners in the ordinary understanding of the term.

According to the latest Labour Force Survey, in February 2020 coal mining employed about 43 300 people, down from a peak of 60 000 in 2012.

Since Australia’s coal output is roughly evenly divided between coking and thermal coal, it seems likely that about 20-25,000 are employed producing the thermal coal that is used for heating and electricity generation.

This compares with a Bureau of Statistics estimate of about 26,850 in renewable energy. A successful transition to a decarbonised electricity sector would require at least a doubling of the current growth rate of renewables, implying more than 26 000 new jobs.

Many of the jobs are transferable

Many of the people employed in coal mining in February 2020 were not miners in the ordinary sense of the term. About 14% worked in white collar (managerial, professional and clerical) jobs.

A large portion of the remainder, such as carpenters, truck drivers and labourers, worked in trades not tied to mining.

The exception is the category known as Drillers, Miners and Shot Firers, which accounts for about 20% of total mining employment. If the same proportion applies in coal mining, there would be around 5,000 specialist drillers, miners and shot firers in producing thermal coal.

A transition program for these workers could be funded for less than the government’s recently announced HomeBuilder.

The wages high, but the conditions are bad

Advocates of coal mining point out that coal mining generally pays higher wages than other industries, including the renewable energy industry. This partly reflects high levels of unionisation, which could be encouraged more broadly.

More significant is probably its reliance on socially destructive fly-in, fly-out working arrangements, which necessitate high wages to offset family separations.

An indication that the wages earned by workers in the mining industry represent
compensation for poor conditions can be derived from evidence on workforce turnover.

The mining industry is characterised by annual turnover of 20% to 30%, substantially higher than that for the labour market as a whole.

And much of the employment isn’t local

Largely because of fly-in, fly-out, the number of communities that depend on coal as the primary source of their local employment is small.

Moreover, in many cases, these communities, such as those of the Bowen Basin, are well endowed with solar and wind resources.

With appropriate planning (instead of the current chaos in electricity policy) these communities could be given priority in the development of utility-scale solar and wind generation, along with the necessary transmission links.

The result might be be a net gain in local employment.




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On Monday the Minerals Council of Australia announced a Climate Action Plan, proclaiming the need for action to reduce the risks of human-induced climate change and expressing support for “world-wide decarbonisation”.

What it did not do was suggest that the 25,000 or so Australians who work in coal mining could be switched to other industries.

That has been the conventional wisdom for some time – that a switch of 25,000 jobs from one industry to another would be too much for Australia to handle.

Yet when the coronavirus hit, we shut down industries employing three million Australians overnight, and dealt with the economic consequences impressively.

We have demonstrated our capacity to do the same for the much more dangerous, if less immediate, risk of catastrophic climate change.The Conversation

John Quiggin, Professor, School of Economics, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia’s devotion to coal has come at a huge cost. We need the government to change course, urgently



AAP/Lukas Coch

Judith Brett, La Trobe University

Because we are rich in coal and gas, Australia has been plagued with two decades of wars over climate policy. The wars have claimed three prime ministers: Kevin Rudd, Julia Gillard and Malcolm Turnbull. They have also, in the words of journalist Alan Kohler,

ruined Australia’s ability to conduct any kind of sensible discussion about economic policy and to achieve consensus on anything.

The response to the pandemic shows that consensus and effective, evidence-based policy are not impossible for Australia’s politicians. Faced with a crisis of life and death, they can put aside ideology and stare down vested interests.

The optimists among us hope they can do this with the life and death crises humanity is facing as the planet heats, and that the terrible fires last summer will have convinced our leaders climate change is real, and effective action urgent. So far, the calls for urgent action are louder from business than from political leaders. Innes Willox, the chief executive of the Australian Industry Group, has linked restoring growth after the pandemic to the achievement of net-zero emissions by 2050.

The federal government, by contrast, is championing gas as a “transition fuel” between coal and renewables. Prime Minister Scott Morrison’s handpicked chair of the National COVID-19 Co-ordination Commission, Nev Power, has strong links to the gas industry.

Calling gas a “transition fuel” at least admits the need for a transition. But gas also contributes to the planet’s heating, and the federal government has no plausible plan to meet Australia’s Paris target, nor to ramp it up, which must be done for a safe future.




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The grip that coal and gas has on our political elites goes back to the 1960s, when minerals replaced wool as the mainstay of our commodity exports. Iron ore and coal led the way.

About the same time, mining’s social licence was being challenged by Indigenous Australians, who objected to mining on their traditional lands, and by environmentalists concerned about mining’s destructive impact on natural habitats. The miners’ response was a concerted public relations campaign to align their interests with the national interest by convincing Australians their prosperity depended on mining and should not be curtailed.

In this, the miners have been spectacularly successful. First, in the 1980s, they stymied the implementation of the Hawke Labor government’s plan for uniform land rights legislation, which would include protection of sacred sites, the right to royalties and a veto over mining on Indigenous land.

In Australia, unlike other common law countries, the Crown owns the minerals, so the veto would have given Indigenous owners more rights than freehold owners. Miners launched a furious public campaign centred on the argument that Indigenous Australians should not have special rights.

A decade later, after the High Court determined in the Mabo and Wik judgements that forms of native title had survived European settlement, the miners fought again to make sure the resulting legislation did not include any veto over mining; and it didn’t.

Second, they have delayed effective government action on climate change. At the end of the century, as pressure mounted for a reduction in the burning of fossil fuels, Australia’s coal producers organised to prevent the federal government from signing international agreements to reduce carbon emissions. Their core argument was that mining underpinned Australia’s wealth, but they also spread scepticism about climate change amongst conservative elites, turning it into an identity marker for the Australian right.

Under John Howard, fossil fuel advocates gained extraordinary access to government decision-making on climate and energy policy. This access was not given to environmental non-government organisations (NGOs) or climate scientists. So much for balance.

The power of the fossil fuel lobby was weaker after Howard lost the 2007 election. Later, it was unable to prevent the Gillard government from implementing a price on carbon and establishing a series of agencies to advance action on climate change.

But with Tony Abbott as prime minister, the industry’s power was back. Scepticism about climate science spread to science and expertise generally, undermining the federal government’s commitment to innovation and research. The fossil fuel lobby is not solely to blame for the Coalition’s philistinism under Abbott, but it bears some responsibility for its self-interested spreading of climate scepticism.




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The mining lobby’s third success has been to capture the National Party and turn it into the party of coal and coal seam gas, even when extracting these destroys the good agricultural land on which our food security depends. This is an astonishing achievement.

In March 2019, on Network 10’s The Project, Waleed Aly asked Nationals leader Michael McCormack

Could you name a single, big policy area where the Nats have sided with the interests of farmers over the interests of miners when they come into conflict?

Off the top of his head, McCormack could not name one. Mining has so successfully aligned itself with perceptions of the national interest that the National Party now champions the jobs of miners more energetically than the livelihoods of the farmers it once regarded as the heart of the nation.

The biggest lesson from the pandemic is that governments are our risk managers of last resort. Ours, both state and federal, have been prepared to inflict massive economic pain on businesses and individuals to protect our health, and we are grateful.

As we face the much larger but more slow-moving crisis of the heating planet, governments must stare down the fossil fuel industry and its supporters, for all our sakes, even if this inflicts on them some economic pain.

If they can do it for the pandemic, they can do it for climate change.

Judith Brett’s Quarterly Essay, The Coal Curse, is out today.The Conversation

Judith Brett, Emeritus Professor of Politics, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Yes, carbon emissions fell during COVID-19. But it’s the shift away from coal that really matters



Flickr/David Clarke

Frank Jotzo, Australian National University and Mousami Prasad, Australian National University

Much has been made of the COVID-19 lockdown cutting global carbon emissions. Energy use has fallen over recent months as the pandemic keeps millions of people confined to their homes, and businesses closed in many countries. Projections suggest global emissions could be around 5% lower in 2020 than last year.

What about Australia? Here we’ve seen sizeable reductions in electricity sector emissions, but mostly from the sustained expansion in solar and wind power rather than the lockdown.

That is good news. It means our electricity sector emissions will not bounce back once COVID-19 restrictions are lifted, as they might in other parts of the world.

But on the other hand, a prolonged recession could cloud the outlook for new investments in the power sector, including renewables.

What’s clear right now is this: COVID-19 restrictions matter far less to Australia’s power sector emissions this year than the shift away from coal and towards renewables.

A recession would dampen investment in new power projects, including renewables.
AAP

Small fall in electricity demand

We examined Australia’s National Electricity Market (NEM) in the seven weeks from March 16 (when national restrictions came into force) to May 4 this year. We compared the results to the same period in 2019.

The NEM covers all states and territories except Western Australia and the Northern Territory.

Total electricity demand was 3% lower during the first seven weeks of the lockdown, compared with the same period in 2019. About 2% of this was due to an actual fall in electricity use. The rest was due to extra rooftop solar panels installed since May 2019 which lowered demand on the grid.




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Some of the 2% reduction may be due to cooler weather this autumn, leading to lower air conditioning use.

So while COVID-19 restrictions have hammered the economy in recent weeks, they haven’t had a big effect on electricity use. Most industrial and business power use has continued uninterrupted. Most office buildings have not fully shut down, although many people are working from home and use more electricity there.

A hefty drop in emissions

Despite the modest fall in electricity demand in the first seven weeks of lockdown, emissions fell substantially – by 8.5%. Comparing the first quarter of 2020 and 2019, emissions fell by 7%.

This is primarily because more renewable energy is now supplying the grid. Output from solar farms increased by 55% and from wind parks by 19% compared with the first quarter of 2019, reflecting massive amounts of new installed capacity coming online. Output from hydroelectricity increased by 18%, likely reflecting higher rainfall.

More renewables supply combined with falling demand means less output from fossil fuel power plants. Coal plant output fell 9% compared to the same period in 2019, entirely due to lower output by black coal plants in New South Wales and Queensland. Gas fired power output fell by 8%.

Electricity prices plunge

Meanwhile, wholesale prices in the NEM have fallen dramatically. The average price was 60% lower in the seven weeks since March 16 compared with the same period in 2019. A marked reduction in prices was evident from November 2019.

Why? One reason is that prices for natural gas are much lower and hence gas-fired power stations can make lower bids for electricity. Gas prices fell through much of 2019, and dropped further in the first quarter of 2020, associated with the pandemic-induced economic downturn. Gas plants often set the prices for everyone in the market, so this has a big effect on the market overall.




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Also, coal and hydropower plants lowered their bids in this more competitive environment.

The outlook for wholesale prices remains flat. Gas prices seem unlikely to rebound soon. More wind and solar power will come into the market and there is no underlying growth trend in electricity demand.

Relaxation of COVID-19 restrictions is unlikely to make a big difference. What may drive prices up once again is the next large coal plant closure. The last one to close was Victoria’s Hazelwood plant in 2017.

What does this mean for coal and renewables?

Low wholesale electricity prices are good for consumers – in particular industry, where the wholesale price is a bigger proportion of the total charges for electricity supply. On the flip side, they mean less money for power generators.

Across the National Electricity Market, revenue for generators was about A$160 million per week lower during the first seven weeks of lockdown compared to the same period in 2019.

This revenue fall makes coal plants less profitable, and makes life uncomfortable for plants with relatively high costs for fuel and maintenance. It’s likely to push older plants closer to closure.




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Lower prices also make investment in new renewable power less attractive. In recent years, average wholesale prices were well above the typical lifetime average costs of producing electricity from newly built solar and wind parks. There is also uncertainty around how prices will be set in power markets in the future, and how congestion of power transmission lines will be managed.

Nevertheless, the longer term prospects for renewables in Australia remain very good. Solar and wind power are the cheapest of all new generation technologies producing power, and solar power is expected to become even cheaper. A new coal-fired power plant, if one was ever built, would have far higher costs per megawatt hour. Costs for a nuclear plant would be higher still.

A drop in revenue during COVID-19 is bad news for coal-fired power generators.
Wikimedia

The way forward

The numbers show Australia does not need a painful recession to drive carbon emissions down. It needs sustained investment in new, clean technology.

The better the Australian economy recovers, the more private businesses will invest in new energy supply. But if the world falls into a deep and lasting recession, and the Australian economy with it, then the prospects for private investment in new power plants will suffer.

In that case, governments may be well advised to invest public funds in clean energy, more so than they have in the past.The Conversation

Frank Jotzo, Director, Centre for Climate and Energy Policy, Australian National University and Mousami Prasad, Research Fellow, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia listened to the science on coronavirus. Imagine if we did the same for coal mining



Dan Peled/AAP

Matthew Currell, RMIT University; Adrian Werner, Flinders University; Chris McGrath, The University of Queensland, and Dylan Irvine, Flinders University

Australia’s relative success in stopping the spread of COVID-19 is largely due governments taking expert advice on a complex problem. Unfortunately, the same cannot be said of decisions on projects that threaten the environment – most notably, Adani’s Carmichael coal mine.

Our research published today in Nature Sustainability documents how state and federal governments repeatedly ignored independent scientific advice when assessing and approving the Adani mine’s groundwater plans.

We interrogated scientific evidence available to governments and Adani over almost a decade. Our analysis shows governments failed to compel Adani to fully investigate the environmental risks posed by its water plans, despite concerns raised by scientists.

There is also evidence the government approval decisions were influenced by the political climate and pressure exerted by members of government.

Our findings come as the Morrison government conducts a ten-yearly review of the Environmental Protection and Biodiversity Conservation (EPBC) Act. It is critical these laws – Australia’s most important environmental legislation – are reformed to put rigorous, independent science at the core.

Advice ignored

In mid-2019, the federal and Queensland governments approved groundwater management plans for Adani’s Carmichael coal mine. It granted the company unlimited access to groundwater in central Queensland’s Galilee Basin.

We and other experts warned the mine threatens to damage aquifers, rivers and ecosystems – in particular, the Doongmabulla Springs Complex. This system contains more than 150 wetlands which support rare plant communities found nowhere else on earth.

The springs are of major cultural significance to the Wangan and Jagalingou people.

We analysed the full suite of evidence on the groundwater plans from agencies and scientists with expertise in hydro-geology. The evidence, provided to state and federal environment ministers, spanned almost a decade and included at least six independent scientific reviews.

The evidence highlighted major shortcomings, and gaps in knowledge and data.




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Unpacking the flaws in Adani’s water management plan


For example in 2013, the federal government’s Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development (IESC) said key geological characteristics in Adani’s groundwater model were not consistent with available field data.

Expert evidence from court-appointed hydro-geology witnesses in the Land Court of Queensland reiterated this concern and raised new questions over whether the source aquifer for the Doongmabulla Springs had been incorrectly identified.

Subsequent joint reviews by CSIRO and Geoscience Australia in February and June 2019 found Adani had failed to conclusively resolve these issues. The agencies also identified further flaws in Adani’s modelling, including interaction between groundwater and the Carmichael River that was again not consistent with field evidence.

The CSIRO and Geoscience Australia concluded the model was “not suitable to ensure the outcomes sought by the EPBC Act conditions are met”.

Moses 3 Lagoon in the Doongmabulla Springs Complex. Source: Land Services of Coast and Country Inc (2014)

Governments under pressure

The federal government received the reviews from CSIRO and Geoscience Australia in February 2019. It did not publicly release them until then-environment minister Melissa Price announced approval of the groundwater plans on April 8. This was effectively the final federal approval the mine needed to proceed.

Media reports at the time suggested Price had been pressured by members of her government to issue approval before the election. What’s more, her department reportedly pushed the CSIRO to endorse Adani’s plans in just hours, and in the absence of critical information.

Within 48 hours of Adani’s approval being announced, the government called a federal election.




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Morrison government approves next step towards Adani coal mine


The Coalition was returned to power at the election. Federal Labor suffered heavy losses in regional Queensland – a result many claimed was due to their lukewarm support for the Adani mine.

The Queensland Labor government was also required to sign off on the groundwater plans. Following the federal election result, Premier Annastacia Palaszczuk directed that the assessment be completed quickly. The state approved the plans within four weeks.

This was despite being provided a scientific analysis by authors of this article and others, outlining key remaining scientific deficiencies in the groundwater plans.

Once-in-a-decade chance

Our analysis exposes flaws in how evidence informs major government decisions. It also shows why reform of the Environmental Protection and Biodiversity Conservation Act is so urgent.

The laws are currently under review. Many reputable organisations and scholars have proposed ways the legislation can better protect the environment, increase its independence from government and put science at the core.

Independent scientific committees, such as the federal IESC, are commissioned by governments to advise on mining proposals. We suggest such committees be granted greater powers to request specific data and studies from mining companies to address knowledge gaps before advice is issued.

Alternatively – or in addition – a new independent national commission should be established to oversee environmental impact assessments conducted by mining and other development proponents.

This commission should be empowered to interrogate and resolve key scientific uncertainties, free from political interference. Its recommendations to government should take into account a wide range of expert advice and public feedback.

Doongmabulla Springs, a desert oasis scientists say is at risk from the Adani mine.
Flickr

This would not only improve the evidence base for decisions, but may also speed up assessments – ensuring more effective resolution of uncertainties that often lead to protracted conflict and debate about a mine’s impacts.

Such reform is urgently needed. Australia is suffering unprecedented water stress, environmental harm and declining trust in government.

Australian governments listened to the science when it needed to flatten the curve of COVID-19. The same approach is needed if we’re to preserve the places we love and the ecosystems we depend on.




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An Adani spokesperson provided the following response to the claims raised by the authors:

Adani’s Groundwater Dependent Ecosystems Management Plan (GDEMP) was finalised and approved by both the Australian and Queensland governments almost 12 months ago, bringing to an end more than eight years of heavily scrutinised planning and approvals processes.

The approvals were confirmation that the GDEMP complies with all regulatory conditions, following an almost two-year process of rigorous scientific inquiry, review and approvals. This included relevant independent reviews by Australia’s pre-eminent scientific organisations CSIRO and Geoscience Australia.

There are more than 270 conditions within the mine approvals to protect the natural environment and more than 100 of those relate to groundwater.

We’re now getting on with construction of the Carmichael Mine and Rail project, having awarded more than $750 million in contracts to the benefit of regional Queenslanders.

We remain on track to create more than 1,500 direct jobs during the construction and ramp up of our project and some further 6,750 indirect jobs. At a time when our country is facing some of its toughest challenges, we’re determined to deliver on our commitments of jobs and opportunities.The Conversation

Matthew Currell, Associate Professor in Environmental Engineering, School of Engineering, RMIT University; Adrian Werner, Professor of Hydrogeology, Flinders University; Chris McGrath, Associate Professor in Environmental and Planning Regulation and Policy, The University of Queensland, and Dylan Irvine, Senior lecturer in hydrogeology, Flinders University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Aren’t we in a drought? The Australian black coal industry uses enough water for over 5 million people


Ian Overton, University of Adelaide

Water is a highly contested resource in this long, oppressive drought, and the coal industry is one of Australia’s biggest water users.

Research released today, funded by the Australian Conservation Foundation, has identified how much water coal mining and coal-fired power stations actually use in New South Wales and Queensland. The answer? About 383 billion litres of fresh water every year.

That’s the same amount 5.2 million people, or more than the entire population of Greater Sydney, uses in the same period. And it’s about 120 times the water used by wind and solar to generate the same amount of electricity.




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Monitoring how much water is used by industry is vital for sustainable water management. But a lack of transparency about how much water Australia’s coal industry uses makes this very difficult.

Adani’s controversial Carmichael mine in central Queensland was granted a water licence that allows the company to take as much groundwater as it wants, despite fears it will damage aquifers and groundwater-dependent rivers.

Now more than ever, we must make sure water use by coal mines and power stations are better monitored and managed.

Data on total water use by coal mines is not publicly available.
Shutterstock

Why does coal need so much water?

Mines in NSW and Queensland account for 96% of Australia’s black coal production.

Almost all water used in coal mines is consumed and cannot be reused. Water is used for coal processing, handling and preparation, dust suppression, on-site facilities, irrigation, vehicle washing and more.

Coal mining’s water use rate equates to a total consumption of almost 225 billion litres a year in NSW and Queensland, which can be extrapolated to 234 billion litres for Australia, for black coal without considering brown coal.

About 80% of this water is freshwater from rainfall and runoff, extracted from rivers and water bodies, groundwater inflows or transferred from other mines. Mines are located in regions such as the Darling Downs, the Hunter River and the Namoi River in the Murray-Darling Basin.




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The other 20% comes from water already contained in tailings (mine residue), recycled water or seepage from the mines.

The burning of coal to generate energy is also a large water user. Water use in coal-fired power stations is even harder to quantify, with a report from 2009 providing the only available data.

Water is used for cooling with power stations using either a once-through flow or recirculating water system.

The water consumed becomes toxic wastewater stored in ash ponds or is evaporated during cooling processes. Water withdrawn is returned to rivers which can damage aquatic life due to the increased temperature.

No transparency

Data on total water use by coal mines is not publicly available. Despite the development of Australian and international water accounting frameworks, there is no reporting to these standards in coal mine reports.

This lack of consistent and available data means water use by the coal industry, and its negative effects, is not widely reported or understood. The problem is compounded by complex regulatory frameworks that allow gaps in water-use reporting.

A patchwork of government agencies in each state regulate water licences, quality and discharge, coal mine planning, annual reviews of mine operations and water and environmental impacts. This means that problems can fall through the gaps.

Digging for data

An analysis of annual reviews from 39 coal mines in NSW, provided data on water licences and details of water used in different parts of the mine.

Although they are part of mandatory reporting, the method of reporting water use is not standardised. The reviews are required to report against surface water and groundwater licences, but aren’t required to show a comprehensive water balanced account. Annual reviews for Queensland coal mines were not available.

Collated water use — both water consumption and water withdrawal – showed coal mining consumes approximately 653 litres for each tonne of coal produced.

This rate is 2.5 times more than a previous water-use rate of 250 litres per tonne, from research in 2010.

Using this rate the total water consumed by coal mining is 40% more than the total amount of water reported for all types of mining in NSW and Queensland by the Australian Bureau of Statistics in the same year.

By the numbers

NSW and Queensland coal-fired power stations annually consume 158,300 megalitres of water. One megalitre is equivalent to one million litres.

A typical 1,000-megawatt coal-fired power station uses enough water in one year to meet the basic water needs of nearly 700,000 people. NSW and Queensland have 18,000 megawatts of capacity.

Coal-fired generation uses significantly more water than other types of energy.

In total, coal mining and coal-fired power stations in NSW and Queensland consume 383 billion litres of freshwater a year – about 4.3% of all freshwater available in those states.

The value of this water is between A$770 million and A$2.49 billion (using a range of low to high security water licence costs).

They withdraw 2,353 billion litres of freshwater per year.


Author provided/The Conversation, CC BY-ND

The problem with large water use

Coal mining is concentrated in a few regions, such as the Hunter Valley and the Bowen Basin, which are also important for farming and agriculture.

In NSW and Queensland, the coal industry withdraws about 30% as much water as is withdrawn for agriculture, and this is concentrated in the few regions.

Coal mining and power stations use water through licenses to access surface water and groundwater, and from unlicensed capturing of rainfall and runoff.

This can reduce stream flow and groundwater levels, which can threaten ecosystem habitats if not managed in context of other water users. Cumulative effects of multiple mines in one region can increase the risk to other water users.

The need for an holistic approach

A lack of available data remains a significant challenge to understanding the true impact of coal mining and coal-fired power on Australia’s water resources.

To improve transparency and increase trust in the coal industry, accounting for water consumed, withdrawn and impacted by coal mining should be standardised to report on full water account balances.




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The coal industry should also be subject to mandatory monthly reporting and a single, open-access point of water data must be created. Comprehensive water modelling must be updated yearly and audited.

Coal water use must be managed in a holistic manner with the elevation of water accounting to a single government agency or common database.

Australia has a scarce water supply, and our environment and economy depend on the sustainable and equitable sharing of this resource.The Conversation

Ian Overton, Adjunct Associate Professor, Centre for Global Food and Resources, University of Adelaide

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Albanese says we can’t replace steelmaking coal. But we already have green alternatives



Shutterstock

Dominique Hes, University of Melbourne

Despite a wealth of evidence to the contrary, some still propagate the myth that the world will need Australian coal for decades to come. Last weekend Opposition Leader Anthony Albanese joined in, saying thermal and metallurgical coal mining and exports would continue after 2050, even with a net zero emissions target.

Metallurgical coal (or “coking coal”) is mined to produce the carbon used in steelmaking, while thermal coal is used to make steam that generates electricity.

Albanese argues there’s no replacement for metallurgical coal, but this is not the case. The assertion stems from a fundamental misunderstanding of modern steelmaking, and places Australian manufacturers at risk of missing out on massive opportunities in the global shift to a low-carbon economy.

Just as thermal coal can be replaced with clean energy from renewables, we can use low-emissions steel manufacturing to phase out metallurgical coal.




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The problem with steel

Steel is the second-most polluting industrial material in the world after cement, causing 7-9% of global emissions.

Australia manufactures a relatively small amount of steel – 5.3 million tonnes, or 0.3% of world output. Yet, we’re one of the biggest exporters of raw materials for steel production.

There is potential to not only strengthen Australia’s steel manufacturing industry, but also to grow it using the ore (rock containing metals like iron) we currently export and our extensive renewable energy sources.

Doing so would work to our manufacturing strengths, history, abundant resources, and would cater to the future low-carbon market that will still require steel.

There are a few ways we can do this.

Recovering waste

Seventy-two per cent of the world’s virgin steel (steel made from ore, not from recycled material) is created from a high emissions manufacturing process – via the integrated steel-making route. This involves a blast furnace and a basic oxygen furnace, using coal, coke, iron ore and gas.

We can replace the coal and coke with rubber tyres that would otherwise end up in landfill, as shown by University of NSW’s Professor Veena Sahajwalla, who dubbed this process “green steel”.




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Right now we can also boost the recovery of steel from landfills in greater percentages. According to a 2018 national waste report, Australia generated an estimated 67 million tonnes of waste in 2016-17.

Steel makes up 2.5% of this. That’s more than 1.5 million tonnes, enough to build 150,000 buses.

‘Direct reduction’ from renewable hydrogen

But the best way to reduce emissions in steel manufacturing is to shift to “direct reduction”. This process produces more than 60 million tonnes of primary steel each year.

And almost 50 plants around Australia already make steel this way. It results in 40% lower greenhouse gas emissions, while supporting a viable and thriving manufacturing industry, which uses our own raw materials rather than exporting them.




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Here’s how it works. Direct reduction removes the oxygen in ore, which produces metallic iron. The chemical reaction that drives this process uses carbon monoxide and hydrogen, sourced from greenhouse gases – reformed natural gas, syngas or coal.

But there’s no reason these fossil fuels can’t be entirely replaced with renewable hydrogen in the near future.

We’ve seen this from two leading direct-reduction technologies, called Midrex and Energiron. Both use fossil fuels, but also with a high proportion of hydrogen. In fact, Energiron facilities can already use up to 70% hydrogen, and they’ve also trialled 100% hydrogen.

The source of this hydrogen is critical, it can be made from fossil fuels, or it can be made using renewable energy.




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At least five companies in Europe are also working on producing low emissions steel. What’s more, three companies (SSAB, LKAB and Vattenfall) are collaborating to progress the technology, creating the “world’s first fossil-free steel-making technology, with virtually no carbon footprint” – called the “HYBRIT system”.

In fact, SSAB recently announced they’re bringing their plans forward to will produce fossil-free steel by 2026.

A new Aussie industry

The key message is this: it is possible to create low-emissions steel, without metallurgical coal. And it is already happening.

With the support of industry and government, non-metallurgical, low-emissions steel could provide an opportunity to create jobs, develop a decarbonised industry and extend the steel market’s contribution to Australia’s economy.

Not to mention what products we can produce from the steel – adding value in many more ways than just exporting ore – and taking advantage of an increasing consumer demand for low carbon products. This is especially relevant for communities transitioning away from fossil fuels.

There’s not much stopping low-emissions steel from forming a core new Australian industry. Australia must address the costs involved in transitioning the infrastructure, to upgrade plants and processes.

But it needs to start with working from facts – and effective government support and vision.




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The Conversation


Dominique Hes, Senior Lecturer in Sustainable Architecture, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

BlackRock is the canary in the coalmine. Its decision to dump coal signals what’s next


John Quiggin, The University of Queensland

The announcement by BlackRock, the world’s largest fund manager, that it will dump more than half a billion dollars in thermal coal shares from all of its actively managed portfolios, might not seem like big news.

Announcements of this kind have come out steadily over the past couple of years.

Virtually all the major Australian and European banks and insurers, and many other global institutions, have already announced such policies.

According to the Unfriend Coal Campaign, insurance companies have stopped covering roughly US$8.9 trillion of coal investments – more than one-third (37%) of the coal industry’s global assets, and stopped offering reinsurance to 46% of them.

Blackrock matters because it is big

The announcement matters, in part because of Blackrock’s sheer size.

It is the world’s largest investor, with a total of $US7 trillion in funds under its control. Its announcement it will “put climate change at the center of its investment strategy” raises questions about the soundness of smaller financial institutions that remain committed to coal and to a carbon-based economy.


Exract from BlackRock’s letter to clients, January 14, 2020

Blackrock is also important because its primary business is index funds, that are meant to replicate entire markets.

So far these funds are not affected by the divestment policy. BlackRock’s iShares United States S&P 500 Index fund, for instance, has nearly US$23 billion in assets, including as much as US$1 billion in energy investments.

But the contradiction between the company’s new activist stance and the passive replication of an energy-heavy index such as Australia’s is obvious. The pressure to find a solution will grow.

In time, the entire share market will be affected

One solution might be for large mining companies such as BHP to dump their coal assets in order to remain part of both Blackrock’s actively managed (stock picking) and passively managed (all stocks) portfolios.

Another might be the development of index funds from which firms reliant on fossil fuels are excluded. It is even possible that the compilers of stock market indexes will themselves exclude these firms.

The announcement has big implications for the Australian government.




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Blackrock chief executive Laurence Fink noted that climate change has become the top issue raised by clients. He said it would soon affect all all investments – everything from municipal bonds to mortgages for homes.

Once investors start assessing government bonds in terms of climate change, Australia’s government will be in serious trouble.

Australia’s AAA rating will be at risk

The bushfire catastrophe and the government’s inadequate response have shown the world Australia is both among the countries most exposed to climate catastrophe and one of the worst in terms of contributions to solutions.

Once bond investors follow the lead of Blackrock and other financial institutions, divestment of Australian government bonds will follow.

This process has already started, with the decision of Sweden’s central bank to unload its holdings of Australian government bonds.

Taken in isolation, Sweden’s move had virtually no effect on Australia’s bond prices and yields. But the most striking feature of the divestment movement so far is the speed with which it has grown from symbolic gestures to a severe constraint on funding for the firms it touches.




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Climate change: why Sweden’s central bank dumped Australian bonds


The fact that the Adani corporation was unable to find a single bank willing to fund its Carmichael mine is an indication of the pressure that will come to bear.

The effects might be felt before large-scale divestment takes place. Ratings agencies such as Moody’s and Standard and Poors are supposed to anticipate risks to bondholders before they materialise.

It’ll make inaction expensive

Once there is a serious threat of large-scale divestment in Australian bonds, the agencies will be obliged to take this into account in setting Ausralia’s credit rating. The much-prized AAA rating is likely to be an early casualty.

That would mean higher interest rates for Australian government bonds which would flow through the entire economy, including the home mortgage rates mentioned in the Blackrock statement.

The government’s case for doing nothing about climate change (other than cashing in on past efforts) has been premised on the “economy-wrecking” costs of serious action.

But as investments associated with coal are increasingly seen as toxic, we run an increasing risk that inaction will cause greater damage.The Conversation

John Quiggin, Professor, School of Economics, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.